This clip relates to the experiment talked about in part II of chapter 3 in The Wisdom of Crowds. It discussed how people are willing to accept "social proof" of conventional wisdom and act on public knowledge rather than their own private knowledge.

Only watch this if you have eight minutes to waste! Otherwise read below.

To understand the experiment it's probably just enough to read this from The Wisdom of Crowds:

In 1968, the social psycologists Stanley Milgram, Leonard Bickman, and Lawrence Berkowitz decided to cause a little trouble. First they put a single person on a street corner and had him look up at an empty sky for sixty seconds. A tiny fraction of the passing pedrestrians stopped to see what the guy was looking at, but most just walked past. Next time around, the psychologists put five skyward-looking men on the corner. This time, four times as many people stopped to gaze at the empty sky. When the psychologists put fifteen men on the corner, 45 percent of all passers by stopped, and inceasing the cohort of obervers yet again made more than 80 per cent of pedestrians tilt their heads and look up. This study appears at first glance, to be another demonstration of people's willingness to conform. But in fact it illustrated something different, namely the idea of "social proof", which is the tendency to assume that if lots of people are doing something or believe something, there must be a good reason why. This is different from conformity: people are not looking up at the sky because of peer pressure or a fear of being reprimanded. They're looking up at the sky because they assume - quite reasonably - that lots of people wouldn't be gazing upward if there weren't something to see. That's why the crowd becomes more influential as it becomes bigger: every additional person is proof that something important is happening. And the governing assumption seems to be that when things are uncertain, the best thing to do is just to follow along. This is actually not an unreasonable assumption. After all, if the group usually knows best (as I've argued it often does), the following the group is a sensible strategy. The catch is that if too many people adopt that strategy, it stops being sensible and the group stops being smart.